Power Exchange; New Breed of Broker Drives E-biz

As e-business models begin to mature on the Internet, the locus of power is beginning to move away from buyers and sellers as a new breed of brokers begins to emerge as the dominant force on the Web. Business heavyweights are frantically seeking partners to extend the reach of their electronic-commerce initiatives and, in the process, are redefining e-commerce distribution channels.

In an effort to maximize their selling potential beyond their corporate Web sites, several companies, including Barnes & Noble, Dell Computer, Compaq Computer, General Motors, and others, are tapping into the growing number of business-to-business trading communities. And last week's massive merger between America Online and Time Warner creates another e-commerce sales channel that vendors cannot ignore.

"The first wave was ... companies automating their procurement processes. The second wave, happening right now, is trading communities," said Shawn Willett, a senior analyst at Current Analysis, in Sterling, Va. "The next wave is going to be like the Chicago Commodities Exchange: instant fulfillment done completely on the fly."

Barnesandnoble.com this week will announce a partnership with Ariba, a key player in building business-to-business trading networks, to link corporate intranets to Barnesandnoble.com's Business Solutions, a program designed to manage corporate book and periodical subscription purchases. Barnesandnoble.com will implement webMethods' B2B exchange integration software to connect with the Ariba Network.

The integration with Ariba not only expands Barnesandnoble.com's sales channels to Ariba's more than 50 Fortune 500 clients but also increases its retail marketplace, creating a new sales channel: business to business to consumer.

"In one of our customers alone, [the General Services Administration], we have access to 15 million employees," said Christine DiPietro, director of systems development and planning at Barnes & Noble.

An employee on the Ariba network can go out to the Barnes & Noble site, make a purchase, and integrate that purchase back through the company's business process. In many cases, the company has a special discount relationship with the supplier or reimburses the employee for the purchase.

Dell also recognizes the value of extending its reach through partnerships and has plans to offer its wares through trading networks.

"We are deploying with vendors, as opposed to [establishing] peer-to-peer relationships with customers," said John Winfrey, senior integration manager at Dell, in Austin, Texas.

Compaq is also joining the fray.

"The Aribas of the world possess enormous customer bases. Compaq's top priority is to broaden our reach and improve access to our products through what's obviously the technology of the future," a representative of Houston-based Compaq said.

Exchanges continue to sprout in every industry. Last week, Royal Dutch Shell and CommerceOne formed an exchange for oil, gas, and chemical products while Dow Chemical and ChemConnect partnered for the chemical industry.

As companies create online partnerships to market their products and services, a new class of intermediary is emerging, said Barry Parr, director of consumer e-commerce research at International Data Corp., in Mountain View, Calif. These are taking the form of business-to-business exchanges as well as more consumer-oriented services, such as AOL.

The AOL-Time Warner merger created the largest of these intermediaries.

"AOL customers bought $2.5 billion worth of goods last year. What that means is a lot of transactions went through AOL," Parr said.

Auto giant General Motors, not to be left out, announced last week a deal with two Internet companies -- AOL and NetZero -- to put its GM Buypower site on their sites.

"The Net goal with alliances with AOL and NetZero is to generate 10 to 15 times number of leads going to our search engine GM Buypower today. And we get 600,000 hits a month, so that's how massive we expect the change to be," said Mark Hogan, the president of General Motors' eGM unit in Detroit.

For Barnesandnoble.com, partnering with Ariba and deployment of webMethods technology will take e-commerce to the next level by allowing companies to maintain their brand value, calming their fears of disintermediation.

These strategic partnerships give companies "the ability to create and expand business communities at a rate never before thought possible without having to build or acquire to grow," noted Norinder Singh, general manager of business communities at webMethods.

Dan Neel and Martin LaMonica contributed to this article.

Extending e-reach

The pace of partnerships and mergers is quickening as companies seek to boost electronic-commerce initiatives.

* Barnesandnoble.com, webMethods, and Ariba to partner on corporate intranet-based book sales.

* GM to partner with ISPs NetZero and America Online to give access to its consumer site.

* AOL and Time Warner to merge into massive consumer e-commerce channel.

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More about America OnlineAOLAribabarnesandnoble.comBarnes & NobleChemConnectCommerceOneCompaqCompaqDell ComputerDow Chemical AustraliaHolden- General MotorsMartin LaMonicaNetZeroTime WarnerWebMethods Australia

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